Health Care revisited

In several prior posts, I have railed at length regarding the healthcare cost epidemic in our country. As a refresher, I want to summarize the issue and the components that comprise the issue.

The cost of health care per person in our country is the highest on earth. Our entire system in broken and tweaking it is not a viable remedy. The primary culprits creating the out of control costs are:

Insurance & insurance companies – While providing a service their overhead and profits mean that a large % of premium payments do not reach the healthcare system. A single payer system, similar to the ones in Italy & France, are much more cost effective.

Drug Companies – Rx drugs just cost more here. In some instances, as much as 10 times more. The reason is that US companies amortize all of the research costs over US sales only and they view International sales as “incremental”. Outside of research the actual cost to make most drugs is miniscule.

Daily cost of hospital stays – This area is totally out of control. It can run as much as $12,000 per day as compared to under $1,000 for most European countries! The single largest contributing culprit are procedures. For example: The average cost of a CT scan in over $1,500 while that same cost in France is $183!

Physician compensation – Part, but not all, of the disparity here has to do with the outrageous cost of a medical education in the US. Advanced education is the only area of our economy where cost has increased at a faster rate than health care! Physician salaries and a doctor visit both average 2 ½ times more than their European counterparts.

Legal factors – We have far too many lawyers. We have 3 times as many per capita as The UK and 8 times as many as France. Some of this is due to our out of control incarceration rate. With only 5% of the world’s population we pay for 25% of the world’s incarcerated population! We still don’t seem to have enough work for the numbers of lawyers produced so they tend to create work. In this regard health care is an easy target. The result of this work is added costs for the Drug Companies and also for malpractice premiums. As expected, all of these are passed along to the tax payer.

All of us – We play a significant role. Obesity is a significant contributor to increasing medical costs. Obesity is a concern for all countries, but especially so here. Our rate stands at 35% while it is under 20% in both Italy & France. The most alarming fact is that our obesity rate has and is trending in the wrong direction, despite the billions tax payers are spending on Health Education each year. Not only is obesity a cost issue, it is also a significant factor in reducing “quality” of life for the afflicted. A case can be made that the trend would accelerate if we were not spending this money. My view is that there are much more cost-effective methods which will turn the trend around. The sad fact is that all that is required is 30 minutes a day of the proper exercise and a slight reduction in caloric intake. There are simple carrot & stick solutions.

Earlier posts contain considerably more details on the preceding six factors as well as sources for the statistics. Health care costs are the single largest factor contributing to the current budget deficit as well as our massive unfunded liability.